Are Your Employees Working Overtime? Make sure your Wages are in Compliance

Since the financial crash of 2008, there is a growing trend in corporate America. Companies of all sizes are searching for ways to do more with less. Efficiency is the name of the game, and many jobs that were once done by humans have been taken over by machines, outsourced overseas, or eliminated altogether. Working Overtime

In the midst of this downsizing, the remaining employees are becoming workaholics, often working over 40 hours per week on a fairly regular basis. However, some of the companies requiring more hours of their employees are not entirely familiar with the Fair Labor Standards Act (FLSA). The FLSA provides guidance about the minimum you are allowed to pay employees when they work overtime, which employees can be exempted from these guidelines and record keeping requirements.

In general, firms that take in $500,000 a year or more in sales are covered by the FLSA. However, firms that do not take in $500,000 in sales may also be covered in any given week if they are “individually engaged in interstate commerce, the production of goods for interstate commerce, or an activity that is closely related and directly essential to the production of such goods.”

Under the FLSA, non-exempt employees must be paid time and a half for all overtime hours (hours worked over 40) in any given work week. A workweek may be a calendar week (Sunday through Saturday), or the workweek may begin on a different day (such as Monday). Whichever day the week begins, the overtime rules apply when an employee exceeds 40 hours during a “fixed and regularly recurring period of 168 hours” or seven consecutive 24-hour days.

Who is exempted from the FLSA? There are a number of categories of employees that are exempted from the FLSA. The most notable exemptions include:

  • Executives and Administrators
  • Professional Employees
  • Commissioned Sales People

In order to qualify to be exempt, a salaried employee must earn at minimum $455 per week. However, these requirements are not applicable to outside sales personnel and certain professionals such as attorneys and teachers.

Record Keeping: Detailed record keeping requirements apply for employers that have any non-exempt employee that is covered by the FLSA. Failure to keep proper records can result in fines up to $10,000 and criminal prosecution. If you believe your business may be out of compliance with the FLSA, speak to an accounting professional right away and take steps toward becoming compliant as soon as possible.

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